European stocks fell, led by Greece, and U.S. index futures dropped on concern slowing economic growth will hurt the most indebted countries. The yen strengthened.
The Stoxx Europe 600 Index lost 0.8 percent at 11:40 a.m. in London as Greece’s ASE Index tumbled 2.4 percent. Futures on the Standard & Poor’s 500 Index slipped 0.6 percent. The yen appreciated against all of the 16 most-traded currencies. Greek bonds dropped, driving the premium to German bunds to the widest since May 7.
The Federal Reserve, pledging to keep its benchmark interest rate at a record low for an “extended period,” signaled that Europe’s debt crisis may harm American growth, according to a statement yesterday. A report on jobless claims today may underscore the Fed’s view that the expansion is being restrained as joblessness limits consumer purchases.
“The world is going to have more economic problems going forward,” Jim Rogers, chairman of Rogers Holdings, said by phone from Hong Kong. “We have a problem with too much debt and too much consumption and that’s going to continue. I’m short stocks and long commodities and long some currencies.”
More than five stocks fell for every one that gained on the Stoxx 600 index, as 16 of the 19 industry groups retreated. Banks and basic-resources shares posted the biggest, with French lender BNP Paribas SA sinking 2.9 percent and Credit Suisse Group AG sliding 2.5 percent.
Mining companies BHP Billiton Ltd. and Rio Tinto Group lost more than 1 percent in London. The shares earlier rallied after Australia’s Kevin Rudd was ousted as prime minister by his deputy Julia Gillard, prompting speculation about whether a proposed super-tax on the mining industry will be watered down.
Asian Stocks
Most Asian stocks fell, while the MSCI Asia Pacific Index was little changed. The MSCI Emerging Markets Index slid 0.4 percent, declining for a third day. Cnooc Ltd., China’s biggest offshore oil explorer, lost 1.9 percent in Hong Kong.
The decline in U.S. futures indicated the S&P 500 may fall for a fourth day. Caterpillar Inc., the world’s largest maker of construction equipment, slipped 1.6 percent in Swiss trading. Nike Inc., the largest maker of athletic shoes, sank 3.1 percent after revenue missed analysts’ estimates.
A report from the Commerce Department due at 8:30 a.m. in Washington may show orders for durable goods excluding transportation equipment rose 1 percent in May, according to economists surveyed by Bloomberg. Total orders may fall 1.4 percent, depressed by a plunge in volatile demand for commercial aircraft, economists said. A separate report due at the same time from the Labor Department may show jobless claims fell to 463,000 during the week, from 472,000, economists said.
Yen Strengthens
The yen strengthened to 89.55 per dollar from 89.82 yesterday. The euro slipped to $1.2279 from $1.2311 and fell to 110.32 yen from 110.57.
Bonds rallied as stocks fell, with the yield on the 10-year German bund reaching the lowest in more than a week. U.K. gilts rose for a fourth day, pushing the 10-year yield to an eight- month low, on speculation that this week’s British budget cuts will help preserve the nation’s top credit rating.
The extra yield, or spread, investors demand to hold 10- year Greek debt instead of its German counterpart widened 10 basis points to 782 basis points today, or 7.82 percent.
The cost of credit-default swaps insuring Greek government bonds rose 38 basis points to a record 970, according to CMA DataVision. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 8.5 basis points to 556, the highest level in a week, according to JPMorgan Chase & Co.
Copper for delivery in three months rose 1.4 percent to $6,606 a metric ton on the London Metal Exchange, paring an earlier gain of 2.6 percent. Gold added 0.1 percent to $1,236.30 an ounce, erasing an earlier decline. Crude oil for August delivery lost 0.2 percent to $76.21 a barrel on the New York Mercantile Exchange.
----With assistance from Maria Kolesnikova in Moscow and Keith Campbell, Claudia Carpenter, David Merritt, Abigail Moses and Andrew Reierson in London. Editors: Stephen Kirkland, Paul Sillitoe
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
